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Un-Australia Day

January 26...Australia Day...whatever that means in 2006.  Whilst it is probably reasonable for me to suggest that today means bugger all else to many Australians than a Public Holiday, it is also fair to suggest that we think we know more about being "Un-Australian" than being Australian.  We certainly bandy the term around enough to suggest that we know what it means.

The term "Un-Australian" has become one of the most overused adjectives of the last twelve months, and will probably continue its rise to prominance throughout 2006.  Every one is using it; politicans, sports stars, police chiefs, journalists, commentators, people in the street, you name it.  All pedal it out to abuse opponents, or to personally taunt them. 

Here are some examples:

"I think associating with a terrorist organisation demonstrates that you are un-Australian"  Tasmanian MP Michael Ferguson.

" It is not Australian to adopt a mob mentality and assult women.  I have never seen anything as un-Australian"  NSW Police Commissioner Ken Moroney (on the Cronulla riots)

"Labor will fight every day until the Howard Government is brought down for these vicious, unnecessary and unAustralian laws." Opposition Leader Kim Beazley on the Federal Government's Idustrial Relations Laws

On a basic level it is just another in vogue weasel word.  But it has moved to another level now, to become a term that has a nasty, dark meaning.  Used to try and tarnish the character of people who you don't agree with backed up by the assumption that the rest of Australia agrees with them.  Make no mistake, it is a term of abuse.  An attack on character.

You don't hear people (at least I never have) being called un-American, or un-French, or un-British.  So why have we embraced un Australian so much?

I don't really know.  Probably because it reminds me of our cultural cringe and our anxieties and suspicions about globalisation and all things (people, ideas) foreign.

I do know that I squirm every time I hear it.

Happy Australia Day. 

Why don't we have Big Ideas anymore?

Why don't we have any big idea's anymore?

This year marks the 100th anniversary of the publication of Einsteins theory of relativity.  And 1905 was a big year for ideas, says Peter Watson in the Observer- Matisse and Cezanne were at their peak, Lenin, EM Forster and Freud were all publishing seminal works, and the first regular cinemas opened.  In the face of such change, the year 2005 "can't begin to compete with 1905 in terms of important innovations."

Hmm.  We probably try to kid ourselves otherwise, but I kinda agree with Watson when he says that our present world is "nowhere near as interesting and innovative" as it thinks, especially when compared with past ages.  A view that is confirmed probably because I am currently reading Bill Bryson's excellent "A Short History of Nearly Everything" in which every page is full of discovery and great idea's.  It is an incredible read that reinforces how amazing some of our early thinkers like Einstein were.

Sure, we might have all of our new mobile phones, iPods, internet and DNA advances, but do these things fundamentally change the way we think?  Think about it.  Not really.

As Watson suggests, just stop and think about some of the real innovations of the past; the introduction of crop rotation, the adoption of Hindu numerals, the introduction of the factory and the steam engine and the theory of evolution.  But since 1950, what have we got?  Well,  only the pill and the internet are or comparative importance. 

Maybe it is simply a quirk of modern capitalism, we all get to "sample the fruits of earlier innovation" so we don't do much of it ourselves anymore.  We just don't see the need to

Without a doubt these are fast moving, ever changing and very interesting times, but they don't seem to be the times of big ideas.

Thoughts?

Where are all the Australian Entrepreneurs?

An excellent question is posed by Stephen Mayne in the weeks Reader, about why Australian has so few successful young companies:

"Australia is a relatively young country, so why is it that so many of our biggest and best companies are so old?  A quick look at the top 20 Australian public companies reveals lots of old incumbent players like Coles Myer, the Big Four Banks, Telstra, BHP, AMP and Foster's- all of which have been around for decades- and hardly any new ones."

That is a very true observation; Australia doesn't have any new corporate champions coming through. 

I reckon that we (Australians, our Governments and other regulators) have made it too hard for all of our budding entrepreneurs to shake off the bad smell left behind by the rouges of the 1980's like Alan Bond, Christopher Skase and Jack Elliott.    We don't like corporate risk takers in this country any more.  We are adverse to risk, and don't have a culture that readily accepts that failure is all part of the game, part of trying, part of learning.

And of course we have turned chopping down "tall poppies" into a national sport.  A sport at which we (shamefully) excel.

In the US if you go broke having "a go" you don't seem to cope the same level of condemnation as you do here in Australia.  They have a far greater tolerance for things like bankruptcy and business failure.So is it any wonder that the US has produced billionaires from booming companies like Yahoo, Google, Dell and eBay.  And we have... well, not much.  Except for a few infrastructure companies with Government contracts, Child Care centres that rely on Government subsidies and airlines and telco's that make bucks because they operate in cosy little duopolies.

Add to that the barriers for entry into many of our growth areas are too high, and the level of Government support and encouragement for our genuinely innovative risk takers and innovators is too low. 

You are better off just getting a nice, secure job with one of the big, old, unoriginal companies.

The Great Oral-B Sampling Campaign

I pick up the Herald Sun each morning on my way to work.  I toss the Indian bloke in the 7-11 a dollar coin and off I go.  But this morning he made me stop and gave me 50c back....He uttered something about a mini-tooth wiper thingy being inside. 

Hmm.  Apparently, Gillette, which is in the process of merging with Proctor & Gamble to create the world's biggest consumer products company, came up with the idea of spending several million dollars on Australia's biggest ever single day sampling exercise by funding a halving of the cover price of papers including the Herald Sun, The Daily Telegraph, The Courier-Mail and The Advertiser.  That gives them a reach of more than 2 million people, who all got a sample an Oral B mini tooth wiper.

As Stephen Mayne at Crikey said today, "I never imagined buying a dead tree splattered with filthy ink and then taking something out of it and cleaning my teeth, but it happened this morning."  Sure did.

They are an innovative lot over at Gillette.

When they launched Mach 3 in Sydney, everyone who went through the Sydney Harbour Bridge toll for a day was paid for by Gillette, resulting in a stack of press coverage. More recently they painted a Virgin jet to look like a razor to promote the launch of a new power shaver.

Why do this?  It is a fact that internet and viral marketing is on the rise as television and newspapers decline, prompting the marketeer to try more and more crazy concepts to stay in the game with the big-spending global consumer giants.

Who's to blame for Australia's "Skill Crisis"

Lots of people are discussing Australia's skills "crisis", capacity constraints, the blockages to economic growth caused by the lack of a skilled workforce and the need to boost productivity.  But who's to blame for all of this?

I was talking to someone on Thursday who thought the answer was pretty clear; "the Howard Government."   He is not alone, lots of people are  blaming the Government (sub req) and a lack of foresight:

"Since at least 1999, Australian governments, state and Commonwealth, have been aware of widespread shortages in key areas. Between 1993 and 2002 there was an overall 16 per cent decline in the training rate in the metals, building, construction, vehicle and electrical areas compared with the previous decade. This means that our national training effort has not been sufficient to replace and maintain the level of skilled workers in these vital sectors of the national economy."

This is fair enough too, PM Howard must shoulder some of the blame, and his lame defence on the ABC's Insiders doesn't help matters;

"We do have some skills shortages - I identified that, the Government identified that months ago," he said.

"It is not as if this has crept up on us and it is only something we have become aware of in the last few weeks.

"We were on the case of skill shortages months ago."

Months ago?  Oh, that's good then.  At least he is on top of it!

Of course that is ridiculous; he sounds a bit like an innocent bystander who is completely surprised by what has happened; a rabbit stunned by headlights.  It is fair to ask how come we have only just realised that we are running out of a skilled workforce?

But is it entirely the Governments fault?

For the past fourteen years we have been living in rays of fin economic sunshine; we have consistently produced budget surpluses on both state and federal levels, to the point where our Governments are flush with cash.  But what have they spent it on?  Not much.  Certainly not any major skills-encouraging infrastructure projects that's for sure.  We have demanded that our Governments produce surpluses.  It's almost as if we are happy for them to keep our money in the bank rather than spending it.  Why?  Why, when debt has been so cheap have we been so scared to go into deficit?  Too scared to borrow to build roads, dams or undertake any other major project that encourages people to learn new skills?

Because we'd vote out a Government that did to us, that's why.

I also think that Australia's corporate leaders should tread carefully when it comes to pointing the finger at the Government, because they aren't entirely guilt free in all of this either.

Listed Australian companies have just produced their biggest profit margins since the heady days of the late 1980's; but none of them seem to understand that sustainable earnings means investing on a range of activities (like training and R&D) that take a while to kick into the bottom line.  I read recently that fewer that 25% of Australian companies provide training that leads to qualifications. 

Take BHP Billiton for example.  They would rather spend $9billion to take over WMC and it's "ready to go" Olympic Dam mine, rather than spend even half of that employing some people and doing some of it's own exploration.  That isn't the Government's fault.  Nor is the fact that WMC seems to think that increasing its apprentice numbers from 35 last year to 45 this year makes it a good corporate citizen.  For a mining giant the size of WMC  (which will make in excess of $1billion this year) to only employ 45 apprentices is pathetic.

So whilst the Government needs to do its bit the re-equip our workforce with in demand skills, Big Business and Big Bosses with even Bigger salaries need to do their bit as well.

The "Walmart-isation" of Australian Supermarkets

uYesterday I talked about Chris Corrigans arrival of an airline dupololist, and no doubt he'll make a stack of cash out of controlling most of Australia's transport systems (now that he controls the Virgin Blue airline).  But, in other "duopoly news"; Australia's two biggest retailers (Coles Myer and Woolworths) are on the verge of a huge profit bonanza.  Coles Myer announced it's half yearly profit last Thursday, and at $403.8million, it is nearly twice what it was in 2001.  And Woolworths will probably do even better than that.

Cleaning up like this has been achieved through some clever productivity gains as well as increased volume through lower prices.  Of course, all of this is great for consumers, terrific for keeping inflation and interest rates down, but it ain't that grand for many smaller food suppliers and manufacturers.

The Aussie giants have learned much from US Monolith Walmart in the art of putting the squeeze on their suppliers.  Almost to the point of suffocation.  And sometimes beyond that.  Many suppliers in Australia are learning that they must either play by the new rules, or risk having to pull the shutters down forever.  Of course, on the flip side, their are opportunities abound for those companies that can and do fall into line.

Further adding to their woes is Coles Supermarkets new 3-tiered Housebrand strategy, which is expected to contribute up to 30% of turnover by 2007.  This means that the No 4 brand by market share will become a sitting duck, and No 3 might even find itself in strife.  The producers of these brands will have few choices; they can move into supplying the housebrands and succumb to the whims of the big chains, or launch massively expensive marketing campaigns to eek back some market share.  Either way it will hurt short term profits, and potentially longer terms ones as well.

But if they can prove to be reliable, and low cost, smaller food manufacturers can use the housebrands to get in on all the action.  Up until now they would have found it almost impossible to get shelf-space.

Just more Big getting Bigger by swallowing up all the small fish.

Innovation through Acquisition (2)

Engineer2Entreprenuer has a post talking about the trend towards Lazy Big Co. buying innovation from Fast-Smart Little Co, and offers this idea:

"Something that could help those big sterile companies is to support incubators so people with ideas can get together and try to make something new. They would take on the role of angel investors or VCs but they could also or instead provide office space in underused building and some of their salvage equipment that still works, old desks, chairs and the like."

Will never happen though....makes far too much sense.  Fancy making something new when you can just acquire a company that has something new and bolt it on (and then sit back and watch it fail).

The Boss 101

In last weeks (excellent edition) Australian Financial Review's Boss magazine they published a list (I know!) of 101 ideas; a sort of collection of snippnets they have gleaned from interviewing and profiling different leaders and thinker over the last five years (from Peters to Porter, Branson to Walton).

Here are some of my favorites:

• Tradition Sucks.  Look at the success of screw-top wine bottles.  Why spend time and money doing things the old fashioned way when modern technology can make things functional and stylish
• Plain Talk
• Obesity.  Fat clothes, fat leisure, airline seats for fat people. There's a market out there for those savvy enought to cater for the growing population (ahem) in prosperous countries who eschew the equally buoyant market in diets and wellness
• Water Engineering.  Desperately seeking more H2O, we'll also be keen on new technical answers
• Simplicity.  As Albert Einstein said (and I love this quote): "Everything should be made as simple as possible, but not simpler."
• Gossip.  There's a lot of it about as work becomes the new social hub.  Savvy employers will nurture the interactions and colonise the conversations.  (Weblog's anyone?)

But my (as an unashamed capatilist who has some problems with certain CSR models):

• Backlash. Against Coroprate Social Responsibility, that is.  Michael Moore, do NOT come on down.  The Economist magazine got in first with a multi-page special abouth the "industry" of CSR and its potential to distract bosses from capatilism's real task- discharging responsibilities to shareholders.  Picking up on an emerging analysis of the "misguided" advocates of CSR, the magazine argues that while capatilism needs public intervention- such as taxes and regulation- and its bosses need accountability, CSR is not the way to achieve those ends.  But it is clear that even if CSR is out, business ethics are in.  Big time.  If your company isn't doing something worthwhile, quit now.  Otherwise focus on creating shareholder value.

But will this arguement wash with the citizens?  Thoughts?

Who needs innovation when you can have am Acquisition Manager

Oligopoly Watch points to a Wall Street Journal article that looks at the current boom in corporate mergers and big eating small acquisitions; "Bosses Prefer Buying Businesses To Building Them", 2/17/2005). The author sees the following points about the current boom:

1. Many big companies are flush with cash right now. Many have used that money to pay down debts, buy back stock, and increase dividends. The next logical place to put that money is into acquiring new companies.
2. While the world economy is doing better than it was after the Internet bubble burst, the actual growth in capital spending is increasing at a modest speed, and that looks likely to be an upcoming trend. Therefore, expanding through internal growth is getting harder.
3. Corporate heads are more optimistic than ever about mergers and acquisitions, in spite of the relatively high valuation of suitable targets. But the key is investors. In contrast to some of the thinking before, investors have been rewarding a number of skillful acquirers with high stock prices. Since execs get highly compensated (options, shares, incentives) when stock prices go up significantly, there's a good reason. (Of course, we often see executives get highly rewarded when stock prices go down, so that may not be the sole motivator.)

Whilst it's all good and well for the Big end of town to swallow up whatever and whoever they want, in the end it strangles many new ideas and innovation that generally only occur "down the other end of the street." 

What tends to happen is that Big Slow Corp (who is too lazy (dumb?) to do something WoW itself) buys Fast Little Company in order to latch onto and eliminate what might become a threat to them; which they simply see- from afar- as being the systems, technology, people, reputations etc within the Little Co. they are eying off.

But they always forget that it was the company culture of Little Co that nursed and encouraged the innovation that allowed the Little Company to be so fast in the first place; enabling it to leverage its systems, technology and people.  That culture (= the real, inimitable source of the competitive advantage) is inevitably killed off following the acquisition (Just ask Tony about trying to be innovative in a Big Company), because the Big Co isn't really interested in maintaining a culture of innovation, they just buy other peoples.  So why do they need creative people?  They don't, just Acquisition Managers.

But the potential threat to Big Co has been killed too; so they win anyway.

But if it works, then Big Co still wins:

"Exploiting a product that someone else has made by giving it the big company treatment in marketing, sales, and distribution is a lot less painful than finding ways to make serious and effective internal changes For all the talk of re-engineering the company, most companies would rather just buy another one. That move is high-concept, ego-gratifying, and relatively straightforward. Rethinking a corporation is complex, painstaking, and often tedious."

Tom Peters on Dell & Innovation

It's not often that I disagree with Tom; but I disagree with this:

Dell rules.
Great "business system."
I applaud.
Pathetic innovators!
Consider it a waste!
Newsweek/02.21.2005: "Dell finds it hilarious that HP and Sony fund researchers to come up with new ideas."
TP to MD: You'll not be around 20 years from now! R&D and Re-imaginings count over the long haul.
Come to think of it, nothing new in PCs (save Apple!!!!) in years & years. I don't buy that the PC world is "mature."

I was thinking about this, and whilst he might be be innovative in the classical, text book sence, his distribution methods are innovative, are they not?   Dell distribute and manufacture better than the others. They price tighter than ever thought possible. They let the big  guys design the newest, bestest, brightest.  Then, and only then, do they determine the fastest, most efficient, most inexpensive way to deliver these opportunities to the customer.   Thier processes are innovative, so much so that they have managed to leverage huge competitive advantage from them.

And as for not being around for long, here's what Michael Dell has to say on that:
"Stay tuned. There's a lot we can and will do.  A better business model will beat a better technology, "The days of engineering-led technology companies are coming to an end."

I am inclined to agree.  As products such as computers, televisons, and other consumer electronics become increasingly commoditised and cheaper (CHINA!), people like Dell will only see their potential market grow.